What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-03-04 compared with 2020-03-05 · 219 added, 243 removed, 1023 unchanged (31% of the section changed)

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Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2019 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

We have not experienced any material impact to our internal controls over financial reporting despite the fact that most of our employees are working remotely due to the COVID-19 pandemic.

We are continually monitoring and assessing the COVID-19 pandemic situation on our internal controls to minimize the impact on their design and operating effectiveness.

Report of Management on Internal Control Over Financial Reporting

Company management is responsible for establ ishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Company management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Our internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States, and includes those policies and procedures that:

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Based on that assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2020.

Deloitte & Touche LLP, our independent registered public accounting firm, has issued an attestation report on our internal controls over financial reporting, which is included in Item 8 of this Annual Report on Form 10-K.

Deloitte & Touche LLP, our independent registered public accounting firm, has audited and issued a report on our internal controls over financial reporting, which is included in Item 8 of this Annual Report on Form 10-K.

Directors, Executive Officers and Corporate Governance

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2012 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-1 filed April 19, 2013) .

Description of Capital Stock

Description of Capital Stock (incorporated by reference to Exhibit 4.5 to the Registrant’s Form 10-K filed on March 5, 2019).

Eighth Amendment to Credit Agreement, dated as of June 19, 2020, among Silvercrest Asset Management Group LLC, Silvercrest Investors LLC, Silvercrest Investors II LLC and Silvercrest Financial Services, Inc., as borrowers, City National Bank, a national banking association, and acknowledged by Silvercrest L.P., as guarantor, initially filed as exhibit 4.1 on Form 8-K with the Securities and Exchange Commission on June 19, 2020 (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-Q filed on August 3, 2020).

Form of Second Amended and Restated Limited Partnership Agreement of Silvercrest L.P.

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Seventh Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K filed July 2, 2019) .

Eighth Amendment to Credit Agreement (incorporated by reference to Exhibit 4.1 to Registrant’s Form 8-K filed June 19, 2020).

Amendment to Restricted Stock Unit Award Agreement among Silvercrest Asset Management Group Inc.

Dunn, dated July 28, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 10-Q filed on August 3, 2020).

Employment agreement with J.

Allen Gray dated July 29, 2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 10-Q filed on August 3, 2020).

List of subsidiaries

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XBRL Taxonomy Extension Definition Linkbase Document

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Previously filed

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March 4, 2021

/s/ Wilmot H.

March 5, 2020

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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We have audited the accompanying consolidated statements of financial condition of Silvercrest Asset Management Group Inc.

and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2019, and the related notes to the consolidated financial statements (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 4, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.

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These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Cortina Contingent Consideration — Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of Cortina Asset Management, LLC (“Cortina”) on July 1, 2019 for cash consideration of $33.577 million and $8.592 in Class B Units of Silvercrest L.P.

In addition, the purchase agreement provides for up to $26.209 million of potential earn out payments (“contingent consideration”) over the next four years.

The Company recognized the estimated contingent consideration for Cortina at fair value on the acquisition date in the amount of $13.8 million and at year end in the amount of $15.1 million, using the income approach.

The fair value of earnout payments are based on a revenue growth, however the payoffs are nonlinear and path-dependent.

Accordingly, the Monte Carlo Simulation model is used.

Furthermore, the significant inputs used in establishing the fair value include revenue growth rate, discount rate, and volatility rate.

These are unobservable and reflect the Company’s own judgements about the assumptions market participants would use in pricing the liability.

Therefore, the valuation of the Cortina contingent consideration is considered complex and requires significant management judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Cortina contingent consideration included the following:

We tested the effectiveness of controls over the Cortina contingent consideration, including controls over the valuation methodology for estimating the fair value and revenue forecasts.

We tested management’s methodology for establishing the fair value at year end related to the Cortina contingent consideration.

With the assistance of our fair value specialists, we validated the reasonableness of the unobservable inputs, and other key judgments made by management.

We also assessed the appropriateness of the Monte Carlo simulation by utilizing the assistance of the fair value specialists in order to validate the discount rate and the volatility rate used within the simulation.

We evaluated the reasonableness of management’s assumptions through independent analysis and comparison to external sources.

With the assistance of our fair value specialists, we assessed the mathematical accuracy of the overall Monte Carlo simulation by footing, cross-footing, and recalculating the contingent liability based on the relevant terms of the earn out.

We evaluated management’s ability to accurately forecast future revenues through independent analysis including a comparison of actual results to management’s historical forecasts.

We evaluated the reasonableness of management’s revenue forecasts by comparing the forecasts to:

Historical revenues

Internal communications to management and the Board of Directors

Forecasted information included in Company press releases, analyst and industry reports for the Company and certain of its peer companies

/s/ Deloitte & Touche LLP

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We have served as the Company’s auditor since 2006.

REPORT OF INDEPENDENT REG ISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Silvercrest Asset Management Group Inc.:

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the Company and our report dated March 5, 2020, expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 4, 2021, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Borrowings under credit facility

Deferred rent

Operating lease liabilities

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Issuance of Class B shares

Issuance of notes receivable by partners

Equity-based compensation

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Distributions to partners

Issuance of Class B shares

Equity-based compensation

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Non-cash interest on notes receivable from partners

Non-cash lease expense

Distributions received from investment funds

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Accrued compensation

Operating lease liabilities

Other liabilities

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Cash Flows From Financing Activities

Earn-outs paid related to acquisitions completed on or after January 1, 2009

Earn-outs paid related to acquisitions

Borrowings under credit facility

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Payments from partners on notes receivable

Net cash provided by (used in) financing activities

Net (decrease) increase in cash and cash equivalents

Net cash (used in) provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of year

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Finance lease liabilities (ASC 842 adoption)

Accrued dividends

See accompanying notes to consolidated financial statements.

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Tax Receivable Agreement

In connection with the IPO and reorganization of SLP that was completed on June 23, 2013, Silvercrest entered into a tax receivable agreement (the “TRA”) with the partners of SLP that will require it to pay them 85% of the amount of cash savings, if any, in U.S.

federal, state and local income tax that it actually realizes (or is deemed to realize in the case of an early termination payment by it, or a change in control) as a result of the increases in tax basis and certain other tax benefits related to entering into the TRA, including tax benefits attributable to payments under the TRA.

This will be Silvercrest’s obligation and not the obligation of SLP.

In connection with Silvercrest’s initial public offering (the “IPO”) and reorganization of SLP that was completed on June 23, 2013, Silvercrest entered into a tax receivable agreement (the “TRA”) with the partners of SLP that requires it to pay them 85 % of the amount of cash savings, if any, in U.S.

The payments to be made pursuant to the tax receivable agreement are a liability of Silvercrest and not Silvercrest L.P.

As of December 31, 2020 this liability is estimated to be $ 9,421 and is included in deferred tax and other liabilities in the Consolidated Statements of Financial Condition.

Silvercrest expects to benefit from the remaining 15% of cash savings, if any, realized.

Silvercrest expects to benefit from the remaining 15 % of cash savings realized, if any.

The TRA was effective upon the consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless Silvercrest exercises its right to terminate the TRA for an amount based on an agreed upon value of the payments remaining to be made under the agreement.

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For purposes of the TRA, cash savings in income tax will be computed by comparing Silvercrest’s actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase in its share of the tax basis of the tangible and intangible assets of SLP.

Estimating the amount of payments that Silvercrest may be required to make under the TRA is imprecise by its nature, because the actual increase in its share of the tax basis, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including:

the timing of exchanges of Class B units for shares of Silvercrest’s Class A common stock—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable and amortizable assets of SLP at the time of the exchanges;

the price of Silvercrest’s Class A common stock at the time of exchanges of Class B units—the increase in Silvercrest’s share of the basis in the assets of SLP, as well as the increase in any tax deductions, will be related to the price of Silvercrest’s Class A common stock at the time of these exchanges;

Estimating the amount of payments that Silvercrest may be required to make under the TRA is imprecise by nature, because the actual increase in its share of the tax basis, as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including:

the timing of exchanges of Silvercrest’s Class B units for shares of Silvercrest’s Class A common stock—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable and amortizable assets of SLP at the time of the exchanges;

the price of Silvercrest’s Class A common stock at the time of exchanges of Silvercrest’s Class B units—the increase in Silvercrest’s share of the basis in the assets of SLP, as well as the increase in any tax deductions, will be related to the price of Silvercrest’s Class A common stock at the time of these exchanges;

the extent to which these exchanges are taxable—if an exchange is not taxable for any reason (for instance, if a principal who holds Class B units exchanges units in order to make a charitable contribution), increased deductions will not be available;

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The initial step in the Company’s determination of whether a fund for which SLP is the general partner is required to be consolidated is assessing whether the fund is a variable interest entity or a voting interest entity.

SLP considers whether the fund is a voting interest entity (“VoIE”) in which the unaffiliated limited partners have substantive “kick-out” rights that provide the ability to dissolve (liquidate) the limited partnership or otherwise remove the general partner without cause.

SLP considers the “kick-out” rights to be substantive if the general partner for the fund can be removed by the vote of a simple majority of the unaffiliated limited partners and there are no significant barriers to the unaffiliated limited partners’ ability to exercise these rights in that among other things, (1) there are no conditions or timing limits on when the rights can be exercised, (2) there are no financial or operational barriers associated with replacing the general partner, (3) there are a number of qualified replacement investment ad visors that would accept appointment at the same fee level, (4) each fund’s documents provide for the ability to call and conduct a vote, and (5) the information necessary to exercise the kick-out rights and related vote are available from the fund and its administrator.

SLP then considers whether the fund is a voting interest entity (“VoIE”) in which the unaffiliated limited partners have substantive “kick-out” rights that provide the ability to dissolve (liquidate) the limited partnership or otherwise remove the general partner without cause.

SLP considers the “kick-out” rights to be substantive if the general partner for the fund can be removed by the vote of a simple majority of the unaffiliated limited partners and there are no significant barriers to the unaffiliated limited partners’ ability to exercise these rights in that among other things, (1) there are no conditions or timing limits on when the rights can be exercised, (2) there are no financial or operational barriers associated with replacing the general partner, (3) there are a number of qualified replacement investment advisors that would accept appointment at the same fee level, (4) each fund’s documents provide for the ability to call and conduct a vote, and (5) the information necessary to exercise the kick-out rights and related vote are available from the fund and its administrator.

If the fund is a variable interest entity, SLP then determines whether it has a variable interest in the fund, and if so, whether SLP is the primary beneficiary.

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Non-controlling interest

As of December 31, 2019 and 2018, Silvercrest holds approximately 64.8% of the economic interests in SLP.

As of December 31, 2020 and 2019, Silvercrest holds approximately 66.8 % and 64.8 %, respectively, of the economic interests in SLP.

Silvercrest is the sole general partner of SLP and, therefore, controls the management of SLP.

As a result, Silvercrest consolidates the financial position and the results of operations of SLP and its subsidiaries, and records a non-controlling interest, as a separate component of equity on its Consolidated Statement of Financial Condition for the remaining economic interests in SLP that is held by the limited partners.

The non-controlling interest in the income or loss of SLP is included in the Consolidated Statement of Operations as a reduction or addition to net income derived from SLP.

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Actual results could differ from those estimates.

Significant estimates and assumptions made by management include the fair value of acquired assets and liabilities, equity based compensation, accounting for income taxes, the useful lives of long-lived assets and other matters that affect the Consolidated Financial Statements and related disclosures.

Significant estimates and assumptions made by management include the fair value of acquired assets and liabilities, determination of equity-based compensation, accounting for income taxes, determination of the useful lives of long-lived assets and other matters that affect the Consolidated Financial Statements and related disclosures.

Cash and Cash Equivalents

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Equity Method Investments

Entities and investments over which the Company exercises significant influence over the activities of the entity but which do not meet the requirements for consolidation are accounted for using the equity method of accounting, whereby the Company records its share of the underlying income or losses of these entities.

Entities and investments, the activities over which the Company exercises significant influence, but which do not meet the requirements for consolidation, are accounted for using the equity method of accounting, whereby the Company records its share of the underlying income or losses of these entities.

Intercompany profit arising from transactions with affiliates is eliminated to the extent of its beneficial interest.

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The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment when the loss in value is deemed other than temporary.

The Company’s equity method investments approximate their fair value at December 31, 201 8 .

The Company’s equity method investments approximate their fair value at December 31, 2020 and 2019.

The fair value of the equity method investments is estimated based on the Company’s share of the fair value of the net assets of the equity method investee.

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Receivables and Due from Silvercrest Funds

Receivables consist primarily of amounts for advisory fees due from clients and management fees, and are stated as net realizable value.

Receivables consist primarily of amounts for management and advisory fees, performance fees and allocations and family office service fees due from clients, and are stated as net realizable value.

The Company maintains an allowance for doubtful receivables based on estimates of expected losses and specific identification of uncollectible accounts.

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Goodwill is not amortized but is evaluated for impairment at least annually, on October 1 st of each year, or whenever events or circumstances indicate that impairment may have occurred.

The Company accounts for goodwill under Accounting Standard Codifica tion (“ASC”) No.

The Company accounts for goodwill under Accounting Standard Codification (“ASC”) No.

350, “Intangibles - Goodwill and Other,” which provides an entity the option to first perform a qualitative assessment of whether a reporting unit’s fair value is more likely than not less than its carrying value, including goodwill.

In pe rforming its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the re porting unit’s fair value with its carrying amount.

If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairmen t test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit.

In performing its qualitative assessment, an entity considers the extent to which adverse events or circumstances identified, such as changes in economic conditions, industry and market conditions or entity specific events, could affect the comparison of the reporting unit’s fair value with its carrying amount.

If an entity concludes that the fair value of a reporting unit is more likely than not less than its carrying amount, the entity is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and, accordingly, measure the amount, if any, of goodwill impairment loss to be recognized for that reporting unit.

The Company utilized this option when performing its annual impairment assessment in 20 20 , 201 9 and 201 8 , and concluded that its single reporting unit’s fair value was more likely than not greater than its carrying value, including goodwill.

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Revenue Recognition

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASC 606 (ASU No.

2014-09), “Revenue from Contracts with Customers”, which requires an entity to recognize the amount of revenue to which it expects to be entitles for the transfer of promised goods or services to customers.

The Company has evaluated the impact of ASC 606 on the Consolidated Financial Statements.

The impact of adopting ASC 606 (ASU No.

2014-09) is de minimis to the Company’s consolidated financial statements and recognition of revenue when compared to ASC 605.

The new revenue standard requires more comprehensive revenue recognition disclosure in the Company’s notes to the consolidated financial statements.

The Company generates revenue from management and advisory fees, performance fees, and family office services fees.

Management and advisory fees are generated by managing assets on behalf of separate accounts and acting as investment adviser for various investment funds.

Performance fees relate to assets managed in external investment strategies in which the Company has a revenue sharing arrangement and in funds in which the Company has no partnership interest.

The Company generates revenue from management and advisory fees, performance fees and allocations, and family office services fees.

Management and advisory fees and performance fees and allocations are generated by managing assets on behalf of separate accounts and acting as investment adviser for various investment funds.

Performance fees and allocations also relate to assets managed in external investment strategies in which the Company has a revenue sharing arrangement and in funds in which the Company has no partnership interest.

Management and advisory fees and family office services fees income is recognized through the course of the period in which these services are provided.

Income from performance fees is recorded at the conclusion of the contractual performance period when all contingencies are resolved.

Income from performance fees and allocations is recorded at the conclusion of the contractual performance period when all contingencies are resolved.

In certain arrangements, the Company is only entitled to receive performance fees and allocations when the return on assets under management exceeds certain benchmark returns or other performance targets.

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In order to increase the Company’s assets under management and expand their business, the Company must develop and market investment strategies that suit the investment needs of their target clients and provide attractive returns over the long term.

The Company’s ability to contin ue to attract clients will depend on a variety of factors including, among others:

The Company’s ability to continue to attract clients will depend on a variety of factors including, among others:

the ability to educate the Company’s target clients about the Company’s classic value investment strategies and provide them with exceptional client service;

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Revenue is recognized on a ratable basis over the period in which services are performed.

The Company accounts for performance-based revenue in accordance with ASC 606 by recognizing performance fees and allocations as revenue only when it is certain that th e fee income is earned and payable pursuant to the relevant agreements.

The Company accounts for performance-based revenue in accordance with ASC 606 by recognizing performance fees and allocations as revenue only when it is certain that the fee income is earned and payable pursuant to the relevant agreements.

The Company records performance fees and allocations as a component of revenue once the performance fee which is recognized at a point in time upon crystallization of the performance fee.

As a result, there is no estimate or variabilit y in the consideration when revenue is recorded.

Transition approach

The Company utilized the modified cumulative effect method as part its adoption of ASU 2014-09.

The Company recognized the modified cumulative effective of initially applying ASU 2014-09 as an adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of initial application.

As stated above, the impact of the adoption of ASU 2014-09 was immaterial.

This method was applied to either incomplete contracts the revenue of which had not been recognized in accordance with prior revenue guidance as of the date of initial application or all contracts as of, and new contracts after, the date of initial application.

As of December 31, 2017, all revenue recognized was for complete contracts of revenue.

As a result, there was no adjustment to the opening balance of retained earnings of the annual reporting period that includes the date of adoption, which was January 1, 2018.

As a result, there is no estimate or variability in the consideration when revenue is recorded.

Equity-Based Compensation

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In February 2016, the FASB established Topic 842, Leases, by issuing ASU No.

2016-02 (“ASC 842”), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements.

2016-02 (“ASC 842”), which required lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements.

Topic 842 was subsequently amended by ASU No.

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2018-11, Targeted Improvements.

The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the consolidated statement of operations.

The new standard became effective for the Company on January 1, 2019 and the Company adopted this standard on this date.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application.

An entity may choose to use either (1) the effective date of the standard or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application.

If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date.

The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods.

The standard established a right-of-use model (“ROU”) that required a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the Consolidated Statement of Operations.

The standard became effective for the Company on January 1, 2019 and the Company adopted this standard on this date.

A modified retrospective transition approach was required, applying the standard to all leases existing at the date of initial application.

An entity could choose to use either (1) the effective date of the standard or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application.

If an entity chose the second option, the transition requirements for existing leases also applied to leases entered into between the date of initial application and the effective date.

The entity had to also recast its comparative period financial statements and provide the disclosures required by the standard for the comparative periods.

The Company elected to use the effective date as its date of initial application.

Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods prior to January 1, 2019.

The new standard provides a number of optional practical expedients as part of transition accounting.

The Company elected the “package of practical expedients”, which allowed the Company to avoid reassessing its prior conclusions about lease identification, lease classification and initial direct costs under the new standard.

Consequently, financial information was not updated and the disclosures required under the standard were not provided for dates and periods prior to January 1, 2019.

The standard provided a number of optional practical expedients as part of transition accounting.

The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements as these were not applicable to the Company.

This standard had a material effect on the Company’s financial statements.

The most significant changes relate to (1) the recognition of new ROU assets and lease liabilities on the balance sheet for its office equipment and real estate operating leases and (2) providing significant new disclosures about the Company’s leasing activities.

The standard had a material effect on the Company’s consolidated financial statements.

The most significant changes related to (1) the recognition of ROU assets and lease liabilities on the Consolidated Statement of Financial Condition for its office equipment and real estate operating leases and (2) providing significant disclosures about the Company’s leasing activities.

Upon adoption, the Company recognized additional operating liabilities of approximately $ 44.0 million, with corresponding ROU and other assets based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases.

The Company determines if an arrangement is a lease at inception.

The Company used an incremental borrowing rate based on the information available at the commencement date of the lease in determining the present value of lease payments.

In determining the ROU asset and lease liability at lease inception, the lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

The Company determined if an arrangement was a lease at inception.

The Company used an incremental borrowing rate based on the information available at the commencement date of the lease to determine the present value of lease payments.

In determining the ROU asset and lease liability at lease inception, the lease terms could include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

The new standard also provides practical expedients for an entity’s ongoing accounting for leases .

The Company elect ed the short-term lease recognition exemption for office equipment leases.

The standard also provided practical expedients for an entity’s ongoing accounting for leases.

The Company elected the short-term lease recognition exemption for office equipment leases.

For those current and prospective leases that qualify as short-term, the Company will not recognize ROU assets or lease liabilities.

The Company also elect ed the practical expedient t o not separate lease and non-lease components for all of its leases.

The Company also elected the practical expedient to not separate lease and non-lease components for all of its leases.

Silvercrest and SFS are subject to federal and state corporate income tax, which requires an asset and liability approach to the financial accounting and reporting of income taxes.

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Judgment is required in determining the tax expense and in evaluating tax positions.

The tax effects of any uncertain tax position (“UTP”) taken or expected to be taken in income tax returns are recognized only if it is “more likely-than-not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date.

tax effects of any uncertain tax position (“UTP”) taken or expected to be taken in income tax returns are recognized only if it is “more likely-than-not” to be sustained on examination by the taxing authorities, based on its technical merits as of the reporting date.

The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

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Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

On December 22, 2017, the tax legislation commonly known as the Tax Cuts and Jobs Act (“TCJA”) was signed into law.

Under FASB ASC 740 “Accounting for Income Taxes”, the effects of new legislation are recognized upon enactment.

Accordingly, recognition of the tax effects of the TCJA is required in the interim and annual periods that include December 22, 2017.

The TCJA reduces the corporate tax rate to 21 percent, effective January 1, 2018, for all corporations.

Because ASC 740-10-25-47 requires the effect of a change in tax laws or rates to be recognized as of the date of enactment, all corporations, regardless of their year-end, must adjust their deferred tax assets and deferred tax liabilities as of December 22, 2017, the enactment date.

The effect of changes in tax laws or rates on deferred tax assets and deferred tax liabilities is allocated to continuing operations as a discrete item rather than through the annual effective tax rate.

The Company has completed the accounting for the income tax effects under the TCJA that is relevant to the Company and required to be recorded and disclosed pursuant to ASC 740.

The Company believes that the accounting is final relative to the TCJA and there are no provisional amounts.

The Consolidated Financial Statements reflect all such adjustments and disclosures related to the TCJA that are required under the guidance referenced above.

Recent Accounting Developments

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments—Overall (Topic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities." Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value.

The ASU also amends certain disclosure requirements associated with the fair value of financial instruments.

Some of the amendments in ASU 2016-01 include the following:

(1) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income;

(2) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment;

(3) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes;

and (4) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value, among others.

ASU 2016-01 became effective on January 1, 2018.

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, “Accounting for Credit Losses” which amends the Board’s guidance on the impairment of financial instruments.

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Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses.

This amendment is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company is in the process of evaluating the impact of the adoption of this guidance on its Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15, “Cash Flow Classification” which amends the guidance in ASC 230 on the classification of certain cash receipts an d payments in the statement of cash flows.

The amendment was effective for the Company on January 1, 2018.

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements.

In November 2016, the FASB issued ASU 2016-18, “Restricted Cash” which requires that a statement of cash flows explain the change during a reporting period in the total of cash, cash equivalents, and amounts generally described as restricted cash and restricted cash equivalents.

The amendment was effective for the Company on January 1, 2018.

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements.

In January 2017, The FASB issued ASU 2017-01, “Business Combinations (Topic 85):

Clarifying the Definition of a Business”.

The amendments in this update clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses.

ASU 2017-01 will be effective for the Company in fiscal year 2019 and interim reporting periods within that year.

Early adoption is permitted for transactions that have not been reported in financial statements that have been issued or made available for issuance.

This amendment became effective for the Company on January 1, 2020 .

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements.

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An entity has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

ASU 2017-04 will be effective for the Company in fiscal year 2021 and interim reporting periods within that year.

ASU 2017-04 is effective for the Company in fiscal year 2021 and interim reporting periods within that year.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company expects the adoption of this guidance will not have a material effect on the Company’s Consolidated Financial Statements.

In February 2017, the FASB issued ASU No.

2017-05, “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):

Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets”.

The ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard (ASC 606, as amended).

Subtopic 610-20 was issued as part of the new revenue standard.

It provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers.

The new guidance defines “in substance nonfinancial assets,” unifies guidance related to partial sales of nonfinancial assets, eliminates rules specifically addressing sales of real estate, removes exceptions to the financial asset derecognition model, and clarifies the accounting for contributions of nonfinancial assets to joint ventures.

This ASU was effective for the Company on January 1, 2018.

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements .

In May 2017, the FASB issued ASU 2017-09 “Compensation – Stock”.

The ASU amends the scope of modification accounting for share-based payment arrangements.

The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718.

Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification.

This ASU was effective for the Company on January 1, 2018.

The Company elected to early adopt ASU 2017-04 relating to our impairment test performed during the year ended December 31, 2019.

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” The ASU provides guidance for entities to evaluate the accounting for fees paid by a customer in a cloud computing arrangement which includes a software license.

ASU 2018-15 is effective for public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

ASU 2018-15 became effective for the Company on January 1, 2020 .

The adoption of this ASU did not have a material effect on the Company’s Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” which applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

This ASU is effective for all public entities beginning March 12, 2020 through December 31, 2022.

The Company expects the adoption of this guidance will not have a material effect on the Company’s Consolidated Financial Statements.

In August 2018, the SEC issued Final Rule Release No.

33-10532, Disclosure Update and Simplification.

The rule amends certain disclosure requirements that have become redundant, overlapping, outdated or superseded.

The rule became effective for the Company’s quarterly report for the period ended September 30, 2018, with the ability to adopt the changes in that period, or defer until 2019.

As such, the Company elected to defer the changes to the interim period disclosure rules related to changes to shareholders’ equity until its first quarter report in 2019.

The adoption of this rule did not have a material effect on the Company’s Consolidated Financial Statements .

On April 12, 2019, SAMG LLC and SLP entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Cortina Asset Management, LLC, a Wisconsin limited liability company (“Cortina”), and certain interest holders of Cortina (together, the “Principals of Cortina”) to acquire, directly or through a designated affiliate, substantially all of the assets of Cortina relating to Cortina’s business of providing investment management, investment advisory, and related services (the “Cortina Acquisition”).

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The estimated fair value of contingent consideration is recognized at the date of acquisition, and adjusted for changes in facts and circumstances until the ultimate resolution of the contingency.

Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Condensed Consolidated Statements of Operations.

Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Consolidated Statements of Operations.

The income approach was used to determine the fair value of these payments, by estimating a range of likely expected outcomes and payouts given these outcomes.

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If revenue for the period is equal to 95% or less of the Acquired Revenue, there is no growth payment, and if revenue for the period is between 95% and 140%, the growth payment will be determined using linear interpolation between $ 0 and $ 17,222 .

A fair value adjustment to contingent purchase price consideration of $200 was recorded at December 31, 2019 and is included in general and administrative expenses in the Consolidated Statement of Operations for the year then ended.

SAMG LLC has a liability of $14,000 as of December 31, 2019 related to earnout payments to be made in conjunction with the Cortina Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition for contingent consideration.

Fair value adjustments to contingent purchase price consideration of $ 1,100 and $ 200 were recorded for the years ended December 31, 2020 and 2019, respectively, and are included in general and administrative expenses in the Consolidated Statement of Operations for the years then ended.

SAMG LLC has a liability of $ 15,100 and $ 14,000 as of December 31, 2020 and 2019, respectively, for contingent consideration related to earnout payments to be made in conjunction with the Cortina Acquisition, which is included in accounts payable and accrued expenses in the Consolidated Statements of Financial Condition.

In connection with their receipt of the equity consideration, the Principals of Cortina became subject to the rights and obligations set forth in the limited partnership agreement of SLP and are entitled to distributions consistent with SLP’s distribution policy.

In addition, the Principals of Cortina became parties to the Exchange Agreement, which governs the exchange of Class B Units for Class A common stock of the Company, the Resale and Registration Rights Agreement, which provides the Principals of Cortina with liquidity with respect to shares of Class A common stock of the Company received in exchange for Class B Units, and the TRA of the Company, which entitles the Principals of Cortina to share in a portion of the tax benefit received by the Company upon the exchange of Class B Units for Class A common stock of the Company.

Th e Purchase Agreement includes customary representations, warranties and covenants.

The Purchase Agreement includes customary representations, warranties and covenants.

The strategic acquisition of Cortina, a long-standing innovative and high-caliber growth equity asset management firm, establishes a growth equity capability for the Company.

Furthermore, the Company gains investment professionals that have significant experience and knowledge of the industry and establishes a presence in the Midwest.

Cortina revenue and income before provision for income taxes for the twelve months ended December 31, 2019 that are included in the Condensed Consolidated Statement of Operations are $6,241 and $1,923, respectively.

During 2019, the Company incurred $1,148 in costs related to the Cortina Acquisition, and has included these in general, administrative and other in the Condensed Consolidated Statement of Operations.

Cortina revenue and income before provision for income taxes for the twelve months ended December 31, 2020 and 2019 that are included in the Consolidated Statement of Operations are $ 11,642 and $ 3,016 , and $ 6,241 and $ 1,923 , respectively.

During 2020 and 2019, the Company incurred $ 90 and $ 1,148 , respectively, in costs related to the Cortina Acquisition, and has included these in general, administrative and other in the Consolidated Statement of Operations.

Cash paid on date of acquisition

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Total purchase consideration

The purchase price allocations have been finalized as of December 31, 2019.

The purchase price allocations as presented above were finalized as of December 31, 2019.

The Company believes the recorded goodwill is supported by the anticipated revenues and expected synergies of integrating the operations of Cortina into the Company.

Most of the goodwill is expected to be deductible for tax purposes.

The pro forma information below represents consolidated results of operations as if the acquisition of Cortina occurred on January 1, 2019 and January 1, 2018.

The pro forma information has been included for comparative purposes and is not indicative of results of operations of the Company had the acquisitions occurred as of January 1, 2019 and 2018, nor is it necessarily indicative of future results.

The pro forma information below represents consolidated results of operations as if the acquisition of Cortina occurred on January 1, 2019.

The pro forma information has been included for comparative purposes and is not indicative of results of operations of the Company had the acquisitions occurred as of January 1, 2019, nor is it necessarily indicative of future results.

On December 13, 2018, the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SLP, SAMG LLC (the “Buyer”) and Neosho Capital LLC, a Delaware limited liability company (“Neosho” or the “Seller”), and Christopher K.

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In consideration of the purchased assets and goodwill, SAMG LLC paid to the Seller and the Principal an aggregate purchase price consisting of (1) a cash payment of $ 399 (net of cash acquired) and (2) Class B units of SLP issued to the Principals of Neosho with a value equal to $ 20 and an equal number of shares of Class B common stock of the Company, having voting rights but no economic interest.

The Company determined that the acquisition-date fair value of the contingent consideration was $1,686, based on the likelihood that the financial and performance targets described in the Asset Purchase Agreement will be achieved.

The Company determined that the acquisition-date fair value of the contingent consideration was $ 1,686 , based on the likelihood that the financial and performance targets described in the Asset Purchase Agreement will be

SAMG LLC will make a payment of $ 300 to the Principals of Neosho on the first anniversary of the closing date.

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The estimated fair value of contingent consideration is recognized at the date of acquisition, and adjusted for changes in facts and circumstances until the ultimate resolution of the contingency.

Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Condensed Consolidated Statements of Operations.

Changes in the fair value of contingent consideration are reflected as a component of general and administrative expenses in the Consolidated Statements of Operations.

The fair value of the contingent consideration was based on discounted cash flow models using projected revenue for each earnout period.

The discount rate applied to the projected revenue was determined based on the weighted average cost of capital for the Company and took into account that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated with the contingent payments.

A fair value adjustment to contingent purchase price consideration of ($283) was recorded at December 31, 2019 and is included in general, and administrative expenses in the Consolidated Statement of Operations for the year then ended.

The Company has a liability of $1,403 related to earnout payments to be made in conjunction with the Neosho Acquisition which is included in accounts payable and accrued expenses in the Condensed Consolidated Statements of Financial Condition as of December 31, 2019 for contingent consideration.

Fair value adjustments to contingent purchase price consideration of ($ 75 ) and ($ 283 ) were recorded for the years ended December 31, 2020 and 2019, respectively, and are included in general, and administrative expenses in the Consolidated Statement of Operations for the years then ended.

The Company has a liability of $ 1,028 and $ 1,403 for contingent consideration related to earnout payments to be made in conjunction with the Neosho Acquisition, which is included in accounts payable and accrued expenses in the Consolidated Statements of Financial Condition as of December 31, 2020 and 2019, respectively .

During the year ended December 31, 2020, the Company made contingent purchase price payments to Neosho of $ 300 .

On December 15, 2015, the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”) by and among the Company, SLP, SAMG LLC (the “Buyer”) and Cappiccille & Company, LLC, a Delaware limited liability company (“Cappiccille” or the “Seller”), and Michael Cappiccille (the “Principal”), to acquire certain assets of Cappiccille.

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A fair value adjustment to contingent purchase price consideration of ( $ 25 ) , $54 and $ 41 was recorded at December 31, 201 9, 2018 and 201 7 , respectively , and is included in general, and administrative expenses in the Consolidated Statement of Operations for the year then ended.

The Company has a liability of $ 101 and $ 231 related to Cappiccille included in accounts payable and accrued expenses in the Consolidated Statement of Financial Condition as of December 31, 201 9 and 201 8 , respectively , for contingent consideration.

During the year s ended December 31, 201 9 and 201 8 , the Company made contingent purchase price payment s to Cappiccille of $ 105 and $10 2 , respectively .

Fair value adjustments to contingent purchase price consideration of $ 126 , ($ 25 ) and $ 54 were recorded for the years ended December 31, 2020, 2019 and 2018, respectively, and are included in general, and administrative expenses in the Consolidated Statement of Operations for the year then ended.

The Company has a liability of $ 114 and $ 101 for contingent consideration related to Cappiccille included in accounts payable and accrued expenses in the Consolidated Statement of Financial Condition as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020 and 2019, the Company made contingent purchase price payments to Cappiccille of $ 113 and $ 105 , respectively.

On March 30, 2015, the Company executed an Asset Purchase Agreement (the “Asset Purchase Agreement”), by and among the Company, SLP, SAMG LLC (the “Buyer”) and Jamison Eaton & Wood, Inc., a New Jersey corporation (“Jamison” or the “Seller”), and Keith Wood, Ernest Cruikshank, III, William F.

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The discount rate applied to the to the projected EBITDA was determined based on the weighted average cost of capital for the Company and took into account that the overall risk associated with the payments was similar to the overall risks of the Company as there is no target, floor or cap associated the contingent payments.

The Company has a liability of $418 and $524 related to earnout payments to be made in conjunction with the Jamison Acquisition which is included in accounts payable and accrued expenses in the Consolidated Statement of Financial Condition as of December 31, 2019 and 2018, respectively, for contingent consideration.

In connection with their receipt of the Equity Consideration, the Principals of Jamison became subject to the rights and obligations set forth in the limited partnership agreement of SLP and are entitled to distributions consistent with SLP’s distribution policy.

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The goodwill is expected to be deductible for tax purposes.

A fair value adjustment to contingent purchase price consideration of $ 214 , $ 52 and ( $ 79 ) was recorded at December 31, 201 9 , 201 8 and 201 7 , respectively, and is included in general, and administrative expenses in the Consolidated Statement of Operations for each of the years then ended.

The Company has a liability of $ 418 and $ 524 related to Jamison included in accounts payable and accrued exp enses in the Consolidated Statement of Financial Condition as of December 31, 201 9 and 201 8 , respectively, for contingent consideration.

During the year s ended December 31, 201 9 and 201 8 , the Company made contingent purchase price payment s to Jamison of $ 320 and $ 345 , respectively .

Fair value adjustments to contingent purchase price consideration of $ 70 , $ 214 and $ 52 were recorded for the years ended December 31, 2020, 2019 and 2018, respectively, and are included in general, and administrative expenses in the Consolidated Statement of Operations for each of the years then ended.

The Company has a liability of $ 160 and $ 418 for contingent consideration related to Jamison included in accounts payable and accrued expenses in the Consolidated Statement of Financial Condition as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020 and 2019, the Company made contingent purchase price payments to Jamison of $ 328 and $ 320 , respectively.

INVESTMENTS AND FAIR VALUE MEASUREMENTS

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The inputs into the determination of fair value require significant management judgment or estimation.

Investments that are included in Level III generally include general and limited partnership interests in private equity and real estate funds, credit-oriented funds, certain over-the-counter derivatives, funds of hedge funds which use net asset value per share to determine fair value in which the Company may not have the ability to redeem its investment at net asset value at, or within three months of, the reporting date, distressed debt and non-investment grade residual interests in securitizations and collateralized debt obligations.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

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The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment.

At December 31, 2019 and 2018, the Company did not have any financial assets or liabilities that are recorded at fair value on a recurring basis, with the exception of the contingent consideration related to the acquisition earnouts.

At December 31, 2020 and 2019, the Company did no t have any financial assets or liabilities that are recorded at fair value on a recurring basis, with the exception of the contingent consideration related to the acquisition earnouts.

Contingent Consideration

For business acquisitions, the Company recognizes the fair value of goodwill and other acquired intangible assets, and estimated contingent consideration at the acquisition date as part of purchase price.

This fair value measurement is based on unobservable (Level 3) inputs.

The following table represents changes in the fair value of estimated contingent consideration for the years ended December 31, 2019 and 2020:

Balance at January 1, 2019

Additions to estimated contingent consideration

Payments of contingent consideration

Non-cash changes in fair value of estimated contingent consideration

Balance at December 31, 2019

Additions to estimated contingent consideration

Payments of contingent consideration

Non-cash changes in fair value of estimated contingent consideration

Balance at December 31, 2020

Estimated contingent consideration is included in accounts payable and accrued expenses in the Consolidated Statements of Financial Condition.

Payments of contingent consideration are included in earn-outs paid related to acquisitions completed on or after January 1, 2009 in financing activities in the Consolidated Statements of Cash Flows.

In determining fair value of the estimated contingent consideration, the acquired business’ future performance is estimated using financial projections for the acquired business.

These financial projections, as well as alternative scenarios of financial performance, are measured against the performance targets specified in each respective acquisition agreement.

In addition, discount rates are established based on the cost of debt and the cost of equity.

The Company uses the Monte Carlo Simulation Model to determine the fair value of the Company’s estimated contingent consideration.

The significant unobservable inputs used in the fair value measurement of the Company’s estimated contingent consideration are the forecasted growth rates over the measurement period and discount rates.

Significant increases or decreases in the Company’s forecasted growth rates over the measurement period or discount rates would result in a higher or lower fair value measurement.

Inputs used in the fair value measurement of estimated contingent consideration at December 31, 2020 and 2019 are summarized below:

Monte Carlo Simulation Model

Forecasted growth rate

Discount rate

Please refer to Note 3.

Acquisitions for more details on contingent consideration related to acquisition earnouts.

At December 31, 2020 and December 31, 2019, financial instruments that are not held at fair value are categorized in the table below:

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Depreciation and amortization expense for the years ended December 31, 2020, 2019 and 2018 was $ 1,117 , $ 978 , and $ 747 , respectively.

During 2020, the Company wrote off leased assets with a cost of $ 209 and accumulated depreciation of $ 180 .

During 2019, the Company wrote off leased assets of $ 310 that were fully depreciated as of December 31, 2019.

During 2018, the Company disposed of computer equipment with a cost of $989 and accumulated depreciation of $952.

The following is a summary of the changes to the carrying amount of goodwill as of December 31, 2020 and December 31, 2019:

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Balance, January 1, 2020

Acquisition of Cortina

Balance, December 31, 2020

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Balance, January 1, 2019

Acquisition of Cortina

Balance, December 31, 2019

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and its subsidiaries.

The credit facility consists of a $7.5 million delayed draw term loan that was scheduled to mature on June 24, 2025 and a $7.5 million revolving credit facility that was scheduled to mature on June 21, 2019.

On June 20, 2019, the revolving credit facility was extended to June 19, 2020.

The credit facility consisted of a $ 7.5 million delayed draw term loan that was scheduled to mature on June 24, 2025 and a $ 7.5 million revolving credit facility that was scheduled to mature on June 21, 2019 .

On July 1, 2019, the credit facility was amended to increase the term loan by $ 18.0 million to $ 25.5 million, extend the draw date on the term loan facility to July 1, 2024 , extend the maturity date of the term loan to July 1, 2026 and increase the revolving credit facility by $ 2.5 million to $ 10.0 million.

On June 19, 2020 , the revolving credit facility was further amended to extend the maturity date to June 19, 2021.

The loan bears interest at either (a) the higher of the prime rate plus a margin of 0.25 percentage points and 2.5 % or (b) the LIBOR rate plus 2.75 percentage points, at the borrowers’ option .

On July 1, 2019, the term loan was amended to increase the facility by $18.0 million to $25.5 million, to extend the draw date to July 1, 2024 and to extend the maturity date to July 1, 2026.

The borrowers are able to draw up to the full amount of the term loan through July 1, 2024.

Borrowings under the term loan on or prior to June 30, 2021 are payable in 20 equal quarterly installments.

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The credit facility contains customary events of default, including the occurrence of a change in control which includes a person or group of persons acting together acquiring more than 30 % of the total voting securities of Silvercrest.

As of December 31, 2019 and 2018, the Company did not have any outstanding borrowings under the revolving credit loan.

As of December 31, 2019 and 2018, the Company had $16.2 million and $0, respectively, outstanding under the term loan.

The Company was in compliance with the covenants under the credit facility as December 31, 2020 and 2019.

As of December 31, 2020 and 2019, the Company did no t have any outstanding borrowings under the revolving credit loan.

As of December 31, 2020 and 2019, the Company had $ 12.6 million and $ 16.2 million, respectively, outstanding under the term loan.

There was no accrued but unpaid interest as of December 31, 2020 or 2019.

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In March 2014, the Company entered into a lease agreement for additional office space in Richmond, VA.

The lease commenced on May 1, 2014 and expire d July 31, 2019.

The lease commenced on May 1, 2014 and had an original expiration date of July 31, 2019 .

The lease is subject to escalation clauses and provides for a rent-free period of three months .

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In September 2016, the Company entered into Lease Amendment Number One (“Amendment Number One”) to expand its space and extend its lease.

This expansion was to occur on or about O ctober 1, 2017, and the lease is extended to November 30, 2024.

This expansion was to occur on or about October 1, 2017 , and the lease was extended to November 30, 2024 .

This was further amended on January 16, 2018 (“Amendment Number Two”) to update the expansion date to January 12, 2018 and to extend the term of the lease to November 30, 2028 .

The amended l ease provides for a rent credit of $40.

The amended lease provides for a rent credit of $ 40 .

Monthly rent expense under the amended lease is $ 10 .

In June 2015, the Company entered into a lease agreement for office space in Charlottesville, VA.

The lease commenced on June 30, 2015 and expired on June 30, 2018.

The lease commenced on June 30, 2015 and expired, as amended, on June 30, 2019 .

On June 6, 2019, the Company extended this lease for three years , with the new term beginning on July 1, 2019 and expiring on June 30, 2022 .

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In December 2015, the Company extended its lease related to its New York City office space.

The amended lease commences on October 1, 2017 and expires on September 30, 2028.

The amended lease commenced on October 1, 2017 and expires on September 30, 2028 .

The lease is subject to escalation clauses, and provides for a rent-free period of twelve months and for tenant improvements of up to $ 2,080 .

Monthly rent expense under this extension will be $446.

Monthly rent expense under this extension is $ 446 .

In January 2016, the Company entered into a lease agreement for office space in Princeton, NJ.

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With the Cappiccille Acquisition, the Company assumed a lease agreement for office space in Livingston, NJ.

The lease is month-to-month.

Monthly rent expense is $2.

The lease was month-to-month.

Monthly rent expense was $ 2 .

This lease was terminated in January 2019 .

In January 2018, the Company extended its lease related to its Boston, MA office space.

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With the Neosho Acquisition, the Company assumed a lease agreement for office space in La Jolla, CA.

The lease expires January 31, 2020.

Monthly rent expense is $3.

The lease expired on January 31, 2020 .

Monthly rent expense was $ 3 .

On November 5, 2019, the Company entered into a lease agreement for office space in San Diego, CA.

The lease commences on February 1, 2020 and expires on June 30, 2025.

The lease commenced on February 1, 2020 and expires on June 30, 2025 .

The lease is subject to escalation clauses and provides for a rent-free period of four months and for tenant improvements of up to $ 27 .

Monthly rent expense under this lease will be $12.

Monthly rent expense under this lease is $ 12 .

With the Cortina Acquisition, the Company assumed a lease agreement for office space in Milwaukee, WI.

The lease expires December 31, 2020.

The lease was extended on June 17, 2020 and expires on December 31, 2022 .

Monthly rent expense is $ 12 .

The components of lease expense for the year ended December 31, 2019 is as follows:

December 31, 2019

The components of lease expense for the years ended December 31, 2020 and 2019 is as follows:

Year ended December 31,

Year Ended December 31,

Operating Lease Cost

Finance Lease Cost:

Financing Lease Cost:

Amortization of ROU assets

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Weighted-average discount rate

The Company has finance leases for certain office equipment.

The Company entered into a finance lease agreement for a telephone system during 2014.

The amount financed was $321 and the lease has a term of five years, which began on March 1, 2014.

Monthly minimum lease payments were $5, and continued through November 30, 2018.

On June 30, 2015, the Company assumed certain finance leases for equipment totaling $253 as part of the Jamison Acquisition.

In July 2015, the Company entered into a finance lease for a copier.

The amount financed was $21 and the lease has a term of three years, which began on July 1, 2015.

Monthly minimum lease payments were $1, and continued through June 30, 2018.

In October 2015, the Company entered in a finance lease for a copier.

The amount financed was $18 and the lease has a term of three years, which began on November 1, 2015.

Monthly minimum lease payments were $1, and continued through October 31, 2018.

In January 2017, the Company entered into a finance lease agreement for a copier.

The amount financed was $11 and the lease has a term of two years, which began on January 1, 2017.

Monthly minimum lease payments were $1, and continued through December 31, 2018.

In January 2017, the Company entered into a finance lease agreement for two copiers.

The amount financed was $152 and the lease has a term of five years, which began on February 1, 2017.

Monthly minimum lease payments are $3, and continue through January 31, 2022.

In July 2017, the Company entered into a lease agreement for four copiers.

The amount financed was $72 and the lease has a term of three years, which began on July 1, 2017.

Monthly minimum lease payments are $2, and continue through June 30, 2020.

In March 2018, the Company entered into a lease agreement for a copier.

The amount financed was $11 and the lease has a term of three years, which began on March 1, 2018.

Monthly minimum lease payments are $0.3, and continue through February 28, 2021.

In March 2019, the Company entered into a lease agreement for a copier.

The amount financed was $13 and the lease has a term of three years, which began on March 1, 2019.

Monthly minimum lease payments are $0.4, and continue through February 28, 2022.

In March 2019, the Company entered into an additional lease agreement for a copier.

The amount financed was $12 and the lease has a term of 39 months, which began on March 1, 2019.

Monthly minimum lease payments are $0.4, and continue through May 31, 2022.

In July 2019, the Company assumed a lease agreement for a copier as part of the acquisition of Cortina.

Monthly minimum lease payments are $1 and continue through November 2021.

In August 2019, the Company entered into a lease agreement for two copiers.

The amount financed was $51 and the lease has a term of three years, which began on August 1, 2019.

Monthly minimum lease payments are $1, and continue through July 31, 2022.

The Company has finance leases for the following office equipment:

(i) a five-year finance lease agreement for two copiers totaling $ 152 with monthly minimum lease payments of $ 3 , which began on February 1, 2017 and continue through January 31, 2022 , (ii) a three-year lease agreement for four copiers totaling $ 72 with monthly minimum payments of $ 2 , which began on July 1, 2017 and continue through June 30, 2020 , (iii) a three-year lease agreement for one copier totaling $ 11 with monthly minimum payments of $ 0.3 , which began on March 1, 2018 and continue through February 28, 2021 , (iv) a three-year lease agreement for one copier totaling $ 13 with monthly minimum payments of $ 0.4 , which began on March 1, 2019 and continue through February 28, 2022 , (v) a 39 -month lease agreement for one copier totaling $ 12 with monthly minimum lease payments of $ 0.4 , which began on March 1, 2019 and continue through May 31, 2022 , (vi) a lease agreement for one copier that was assumed as part of the Cortina Acquisition with monthly minimum lease payments of $ 1 , which began on July 1, 2019 and continue through November 30, 2021 , (vii) a three year lease agreement for two copiers totaling $ 51 with monthly minimum lease payments of $ 1 , which began on August 1, 2019 and continue through July 31, 2022 , (viii) a five year lease agreement for a copier totaling $ 82 with monthly minimum lease payments of $ 1 , which began on May 1, 2020 and continue through April 30, 2025 , (ix) a three year lease agreement for a copier totaling $ 59 with minimum monthly lease payments of $ 2 , which began on June 1, 2020 and continue through May 31, 2023 , (x) a three year lease agreement for two copiers totaling $ 43 with minimum monthly lease payments of $ 1 , which began on August 20, 2020 and continue through August 19, 2023 and (xi) a three year lease agreement for two copiers totaling $ 39 with minimum monthly lease payments of $ 1 , which began on August 20, 2020 and continue through August 19, 2023 .

The aggregate principal balance of finance leases was $ 259 and $ 196 as of December 31, 2020 and 2019, respectively.

The assets relating to finance leases that are included in equipment are as follows:

December 31, 2019

The assets relating to finance leases that are included in equipment as of December 31, 2020 and 2019 are as follows:

Finance lease assets included in furniture and equipment

Finance lease assets included in software

Accumulated depreciation and amortization

Depreciation expense relating to finance lease assets was $ 118 , $ 106 and $ 146 for the years ended December 31, 2020, 2019 and 2018, respectively.

During 2020, the Company wrote off leased assets with a cost of $ 209 and accumulated depreciation of $ 180 .

During 2019, the Company wrote off leased assets of $ 310 that were fully depreciated as of December 31, 2019.

Future minimum lease payments under finance leases are as follows:

Minimum Lease

Future Minimum Lease

Weighted-average remaining lease term – finance leases (months)

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Class A, par value $ 0.01 per share

share (1), (2)

1 vote per share (1), (2)

Class B, par value $ 0.01 per share

share (3), (4)

1 vote per share (3), (4)

None (3), (4)

8 unchanged sentences

Each Class B unit of SLP held by a principal is exchangeable for one share of the Company’s Class A common stock.

The principals collectively hold 5,031,017 Class B units, which represents the right to receive their proportionate share of the distr ibutions made by SLP and 35,336 restricted stock units which will vest and settle in the form of Class B units of SLP.

The 35,336 restricted stock units which have been i ssued to our principals entitle the holders thereof to participate in distributions fr om SLP as if the underlying Class B units are outstanding and thus are taken into account to determine the economic interest of each holder of units in SLP.

However, because the Class B units underlying the deferred equity units have not been issued and ar e not deemed outstanding, the holders of deferred equity units have no voting rights with respect to those Class B units.

Silvercrest will not issue shares of Class B common stock in respect of deferred equity units of SLP until such time that the underlyi ng Class B units are issued.

The principals collectively hold 4,721,646 Class B units, which represents the right to receive their proportionate share of the distributions made by SLP and 74,906 restricted stock units which will vest and settle in the form of Class B units of SLP.

The 74,906 restricted stock units which have been issued to our principals entitle the holders thereof to participate in distributions from SLP as if the underlying Class B units are outstanding and thus are taken into account to determine the economic interest of each holder of units in SLP.

However, because the Class B units underlying the deferred equity units have not been issued and are not deemed outstanding, the holders of deferred equity units have no voting rights with respect to those Class B units.

Silvercrest will not issue shares of Class B common stock in respect of deferred equity units of SLP until such time that the underlying Class B units are issued.

Silvercrest’s board of directors has the authority to issue preferred stock in one or more classes or series and to fix the rights, preferences, privileges and related restrictions, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any class or series, or the designation of the class or series, without the approval of its stockholders.

6 unchanged sentences

Issuance of Class A common stock upon conversion of Class B units to Class A common stock

February 2020

Issuance of Class A common stock upon conversion of Class B units to Class A common stock

Issuance of Class A common stock upon vesting of restricted stock units

8 unchanged sentences

Class B common stock outstanding - January 1, 2020

Issuance of Class B common stock in connection with the Neosho Acquisition

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

February 2020

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

Issuance of Class B common stock upon vesting of restricted stock units

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

Issuance of Class B common stock in connection with the Cortina Acquisition

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

Issuance of Class B common stock upon vesting of restricted stock units

Cancellation of Class B common stock upon conversion of Class B units to Class A common stock

3 unchanged sentences

Class B common shares outstanding - December 31, 2020

In January 2019, the Company issued 1,516 shares of Class B common stock to certain Principals of Neosho in connection with the Neosho Acquisition.

In February 2020, the Company redeemed from certain existing partners 155,224 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In March 2020, the Company redeemed from certain existing partners 20,662 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

2 unchanged sentences

In June 2020, the Company redeemed from certain existing partners 5,400 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In July 2019, the Company issued 662,713 shares of Class B common stock to certain Principals of Cortina in connection with the Cortina Acquisition.

In August 2020, the Company redeemed from certain existing partners 24,191 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

In August 2019, the Company issued 241,624 shares of Class B common stock upon the vesting of restricted stock units.

In November 2020, the Company redeemed from certain existing partners 36,361 shares of Class B common stock in connection with the exchange of a like number of Class B units to Class A common stock pursuant to the resale and registration rights agreement between the Company and its principals.

6 unchanged sentences

Partner contributions to SLP are made in cash, in the form of five or six year interest-bearing promissory notes and/or in the form of nine year interest-bearing limited recourse promissory notes .

Limited recourse promissory notes were issued in January 2008 and August 2009 with interest rates of 3.53% and 2.77%, respectively.

The recourse limitation includes a stated percentage of the initial principal amount of the limited recourse note plus a stated percentage of the accreted principal amount as of the date upon which all amounts due are paid in full plus all costs and expenses required to be paid by the borrower and all amounts required to be paid pursuant to a pledge agreement associated with each note issued.

Certain notes receivable are payable in annual installments and are collateralized by SLP’s units that are purchased with the note.

2 unchanged sentences

Beginning balance

New notes receivable issued to partners

Repayment of notes

30 unchanged sentences

Silvercrest Municipal Special Situations Fund II LLC (merged into Silvercrest Municipal Advantage Portfolio S LLC in 2015),

Silvercre st International Fund, L.P.

Silvercrest International Fund, L.P.

(previously known as Silvercrest Global Fund, L.P.),

3 unchanged sentences

Pursuant to agreements with the above entities, the Company provides investment advisory services and receives an annual management fee of 0 % to 1.75 % of assets under management and a performance fee or allocation of 0 % to 10 % of the above entities’ net appreciation over a high-water mark.

For the years ended December 31, 201 9 , 201 8 and 201 7 the Company earned management fee income from the funds listed above, which is included in “Management and advisory fees” in the Consolidated Statement of Operations, of $ 5,104 , $ 6, 458 , and $ 6 , 049 , respectively, and performance fees and allocations of $ 1, 774 , $ 1,477 , and $ 613 , respectively, of which $ 1, 774 , $ 1,477 and $ 613 , respectively, is included in equity income from investments and $ 0 , $ 0 and $ 0 , respectively, is included in performance fees in the Consolidated Statements of Operations.

For the years ended December 31, 2020, 2019 and 2018 the Company earned management fee income from the funds listed above, which is included in “Management and advisory fees” in the Consolidated Statement of Operations, of $ 4,633 , $ 5,104 , and $ 6,458 , respectively, and performance fees and allocations of $ 898 , $ 1,774 , and $ 1,477 , respectively, of which $ 898 , $ 1,774 and $ 1,477 , respectively, is included in equity income from investments in the Consolidated Statements of Operations.

As of December 31, 2020 and 2019, the Company was owed $ 1,018 and $ 1,697 , respectively, from its various funds, which is included in the Due from Silvercrest Funds on the Consolidated Statements of Financial Condition.

60 unchanged sentences

Awards may be granted to employees, including officers, members, limited partners or partners who are engaged in the business of one or more of our subsidiaries, as well as non-employee directors and consultants.

It is initially anticipated that awards under the 2012 Equity Incentive Plan granted to our employees will be in the form of units of SLP that will not vest until a specified period of time has elapsed, or other vesting conditions have been satisfied as determined by the Compensation Committee of the Company’s board of directors, and which may be forfeited if the vesting conditions are not met.

During the period that any vesting restrictions apply, unless otherwise determined by the Compensation Committee, the recipient of the award will be eligible to participate in distributions of income from SLP.

In addition, before the vesting conditions have been satisfied, the transferability of such units is genera lly prohibited and such units will not be eligible to be exchanged for cash or shares of our Class A common stock.

The Compensation Committee may impose vesting conditions and awards may be forfeited if the vesting conditions are not met.

During the period that any vesting restrictions apply, unless otherwise determined by the Compensation Committee, the recipient of awards that vest in the form of units of SLP will be eligible to participate in distributions of income from SLP.

In addition, before the vesting conditions have been satisfied, the transferability of such units is generally prohibited and such units will not be eligible to be exchanged for cash or shares of our Class A common stock.

In August 2015, the Company granted 966,510 restricted stock units (“RSUs”) under the 2012 Equity Incentive Plan at a fair value of $ 13.23 per share to existing Class B unit holders.

25 unchanged sentences

Twenty-five percent of the RSUs granted vest and settle on each of the first, second, third and fourth anniversaries of the grant date .

In March 2020, the Company granted 8,242 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 11.83 per share to a Board member.

These RSUs will vest and settle in the form of Class A shares of Silvercrest.

All of the RSUs granted vest on the third anniversary of the grant date .

In May 2020, the Company granted 86,764 NQOs under the 2012 Equity Incentive Plan to an existing Class B unit holder.

The fair value of the NQOs has been derived using the Black-Scholes method with the following assumptions:

Strike price of $ 10.18 , Risk Free rate of 0.64 % (10-year treasury rate), expiration of 10 years and volatility of 48.0 %.

Additionally, the calculation of the compensation expense assumes a forfeiture rate of 1.0 %, based on historical experience.

These NQOs will vest and become exercisable into of Class B units of SLP.

One-third of the NQOs will vest and become exercisable on each of the first, second and third anniversaries of the grant date.

In May 2020, the Company granted 49,116 RSUs under the 2012 Equity Incentive Plan at a fair value of $ 10.11 per share to an existing Class B unit holder.

These RSUs will vest and settle in the form of Class B shares of SLP.

Twenty-five percent of the RSUs granted vest and settle on each of the first, second, third and fourth anniversaries of the grant date .

A summary of the NQO grants by the Company as of December 31, 2020 and 2019 is presented below:

2 unchanged sentences

Total granted at January 1, 2019

Granted in October 2018

Granted in May 2019

Total granted at December 31, 2019

13.97 – 14.54

Granted in May 2020

4 unchanged sentences

Fair Value per unit

Restricted Stock Units

Fair Value per unit

Total granted at January 1, 2019

13.19 – 13.23

Granted in May 2019

Vested in May 2019

2 unchanged sentences

13.19 – 14.54

Granted in March 2020

Granted in May 2020

Vested in May 2020

Vested in August 2019

(13.19 –14.54

Total granted at December 31, 2020

3 unchanged sentences

As of December 31, 2020 and 2019, the unrecognized compensation expense related to unvested awards is expected to be recognized over a period of 1.44 and 1.62 years , respectively.

For the years ended December 31, 2019 and 2018, the Company recorded total compensation expense related to such Restricted Stock Units and Non-Qualified Options of $2,272 and $3,275, respectively.

DEFINED CONTRIBUTION AND DEFERRED COMPENSATION PLANS

33 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures